Today’s electric utility landscape

Natural gas powers this North Carolina Electric Membership Corp. electricity plant in Anson County that supplies peak-load power to some of its member cooperatives.

Changes are occurring in the electric utility industry that are affecting the price consumers pay for electricity. Because your cooperative is committed to keeping you informed and engaging you in the business that you own, the following overview may help you understand some of the issues facing your cooperative.

Factors influencing the cost of producing and distributing electricity in the U.S. and North Carolina today include:

Government regulations

Aging infrastructure

Shifting sources of fuel

Economic trends

Technology and changing consumer expectations

Regulations

Recent and expected environmental regulations will likely cause the industry to close about 25 percent of the nation's coal-fired power plants. And the remaining coal-fired plants will require upgrades to allow cleaner methods for producing electric power. For the past several decades, the U.S. has relied on coal to produce about 50 percent its electricity. Today, that reliance has declined to about 36 percent.

Regulations also affect the location and construction of new power plants — nuclear, fossil-fueled and renewable energy plants — as well as new transmission infrastructure.

Energy sources

Shifting from coal dependence has seen utilities turn to domestic sources of natural gas, including an increasing tapping of shale gas. Shale gas now comprises about 40 percent of the natural gas used in the U.S. As a result, most of the new generating plants that have gone online are powered by natural gas.

In addition, many states, including North Carolina, require electric utilities to increase the role that renewable energy sources play in their overall power supply portfolio. Like cooperatives nationwide, North Carolina's co-ops continue adding to their power source mix energy from solar, hydroelectric and wind sources, even though, in many cases, the cost of that energy remains higher than traditional sources. And new generating plants in the planning stages will require upgraded and new transmission infrastructure for delivering power to where it's needed.

Economic trends

Improved efficiency in appliances and technology, combined with higher consumer awareness of energy consumption, has resulted in a declining rate in the demand for electricity compared to past patterns of growth. The recent economic recession in the U.S. also has contributed to a slower pace in growth overall, which has meant a slower growth of the "load" that electric utilities serve. While the slower pace has reduced pressure to build new generating plants, utilities must still maintain existing facilities and distribution while planning for future growth.

New technology

Cooperatives and other utilities are embracing new technology that will not only produce power differently but also will deliver it more effectively and efficiently. Emerging generating technology ranges from small nuclear-powered facilities to those run by biomass and other renewable fuels. New battery technology will allow more efficient storage of energy. And improvements in lighting, HVAC and appliances in general are ushering in new patterns of energy usage.

At the same time, technological advancements require greater security in production and distribution systems themselves. Utilities are actively involved in protecting the facilities, the technology and the information employed in providing electric power.

Consumer expectations and involvement

As we depend more and more on technology to accompany our daily lives and run our businesses, electric utilities must rise to the challenge not only to power consumers' lifestyles with a reliable and safe supply of electricity, but also to bring consumers themselves into the act of managing energy use. Modernized grid technology, consumer awareness of energy efficiency, and more localized power sources all have allowed consumers to become more involved.

While these developments all contribute to an environment of rising costs in the electric utility industry, they also have inspired your electric cooperative to focus on effectively managing and controlling its own costs without compromising reliability, quality and safety. Electric utilities always have been expert at forecasting future requirements, and that has not changed. In many areas, today's technology and training has even improved the planning aspect of the business.

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